UNITED STATES | ||
SECURITIES AND EXCHANGE COMMISSION | ||
Washington, D.C. 20549 | ||
FORM 8-K | ||
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 29, 2015
TRIMAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 001-10716 | 38-2687639 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) | ||
39400 Woodward Avenue, Suite 130, Bloomfield Hills, Michigan | 48304 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code (248) 631-5450
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
TriMas Corporation (the “Corporation”) issued a press release and held a teleconference on October 29, 2015, reporting its financial results for the third quarter ending September 30, 2015. A copy of the press release and teleconference visual presentation are attached hereto as exhibits and are incorporated herein by reference. The press release and teleconference visual presentation are also available on the Corporation's website at www.trimascorp.com.
The information furnished pursuant to this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Corporation under the Securities Act of 1933 or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are furnished herewith:
Exhibit No. | Description | |||
99.1 | Press Release | |||
99.2 | The Corporation's visual presentation titled "Third Quarter 2015 Earnings Presentation" | |||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
TRIMAS CORPORATION | ||||||
Date: | October 29, 2015 | By: | /s/ David M. Wathen | |||
Name: | David M. Wathen | |||||
Title: | Chief Executive Officer | |||||
CONTACT: | |||
Sherry Lauderback | |||
VP, Investor Relations & Communications | |||
(248) 631-5506 | |||
sherrylauderback@trimascorp.com | |||
TRIMAS CORPORATION REPORTS THIRD QUARTER 2015 RESULTS
Company Reports Growth in Income(1) and EPS(1) of More Than 30%
Raises Full Year 2015 EPS and Free Cash Flow Guidance
BLOOMFIELD HILLS, Michigan, October 29, 2015 - TriMas Corporation (NASDAQ: TRS) today announced financial results for the quarter ended September 30, 2015. The Company reported third quarter net sales from continuing operations of $222.2 million, relatively flat as compared to third quarter 2014. The Company reported third quarter 2015 income from continuing operations attributable to TriMas Corporation of $11.7 million, or $0.26 per diluted share, as compared to income of $11.1 million, or $0.24 per diluted share, in the third quarter of 2014. Excluding Special Items(1), third quarter 2015 diluted earnings per share from continuing operations would have been $0.39, a 34.5% improvement from $0.29 in third quarter 2014.
TriMas Highlights
• | Improved income and earnings per share from continuing operations by 30.9% and 34.5%, respectively, excluding the impact of Special Items(1), compared to the third quarter of 2014. |
• | Announced and began implementing a broadly-focused Financial Improvement Plan, targeting cost actions which are expected to yield approximately $15 million of annual savings, and improve the Company’s profitability, cash flow conversion and operational efficiency. |
• | Improved operating profit margin(1) by 300 basis points with improvements in Packaging, Aerospace and Energy, and a reduction in corporate expenses as compared to third quarter 2014. |
• | Continued to execute on reorganization and integration initiatives in Packaging and Aerospace, the Company's highest margin businesses, to drive future growth and margin expansion. |
• | Launched the TriMas Aerospace Engineering Research and Technology team to partner with the Company's aerospace customers to support innovation and application growth; TriMas Aerospace also recognized as the Embraer 2015 Hardware Supplier of the Year. |
"While our third quarter sales were relatively flat year-over-year, we achieved 300 basis points of margin expansion and an increase of 34.5% in earnings per share(1)," said David Wathen, TriMas President and Chief Executive Officer. "We realized year-over-year operating profit margin improvements in three out of four of our segments, reduced corporate expenses as compared to a year ago, and realigned our engine and compressor business' cost structure to break even despite a 60% decline in sales year-over-year. We were able to achieve these results in an environment of global macroeconomic uncertainty, with external headwinds related to continued low oil-related activity, a strong U.S. dollar and relative weakness in our industrial end markets."
"In addition, our team is aggressively implementing our Financial Improvement Plan announced in September, pursuing cost actions to accelerate business improvement initiatives that maintain or enhance margins across the company. With significant uncertainty in many end markets and economies, we continually assess and implement measures to improve our operations and financial position. We expect this broad-based set of cost reductions to position us for improved margins and free cash flow in 2016, in spite of top-line headwinds. While our immediate focus remains on cost reduction, we also continue to invest in initiatives that will drive future profitable growth," Wathen continued.
"Based on our third quarter performance and the current trends we are experiencing, we are updating our full year 2015 outlook from continuing operations, slightly lowering sales guidance, while increasing projected earnings per share from $1.15 to $1.25, to $1.25 to $1.30, excluding any future events that may be considered Special Items. We are also increasing 2015 Free Cash Flow outlook to be between $50 million and $60 million. As we move forward, we are focused on mitigating the challenging growth environment, while driving enhanced profitability through cost reduction actions and investment in higher-return projects." Wathen concluded.
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Third Quarter Financial Results - From Continuing Operations
• | TriMas reported third quarter net sales of $222.2 million, relatively flat as compared to $222.3 million in third quarter 2014. The positive impact of recent acquisitions and organic initiatives was offset by sales declines resulting from the impact of lower oil prices, macroeconomic uncertainty and $3.6 million of unfavorable currency exchange, primarily in Packaging and Energy. |
• | The Company reported operating profit of $21.6 million in third quarter 2015, an increase of 5.1% as compared to third quarter 2014. Excluding Special Items(1) related to severance and business restructuring, third quarter 2015 operating profit would have been $29.9 million, an increase of 28.6% as compared to $23.2 million during third quarter 2014. Third quarter 2015 operating profit margin, excluding Special Items(1), increased 300 basis points to 13.4%, as a result of improvements in Packaging, Aerospace and Energy, and a reduction in corporate expenses as compared to third quarter 2014. |
• | Third quarter 2015 income from continuing operations attributable to TriMas Corporation was $11.7 million, or $0.26 per diluted share, compared to $0.24 per diluted share in third quarter 2014. Excluding Special Items(1), third quarter 2015 income from continuing operations attributable to TriMas Corporation would have been $17.8 million, or $0.39 per diluted share, an improvement of 34.5% as compared to $0.29 in third quarter 2014. |
• | The Company reported Free Cash Flow (defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of the Financial Improvement Plan, less Capital Expenditures) of $1.5 million for third quarter 2015 as compared to $8.0 million in third quarter 2014. On a year-to-date basis, the Company generated $9.1 million of Free Cash Flow and expects to generate between $50 million and $60 million for full year 2015. |
Discontinued Operations
On June 30, 2015, the Company completed the spin-off of its Cequent businesses (comprised of the Cequent Americas and Cequent APEA reportable segments), creating a new independent publicly-traded company, Horizon Global Corporation, through a distribution of 100% of the Company's interest in Horizon Global to holders of TriMas common shares. The results of operations of the Cequent businesses, as well as the one-time costs incurred in connection with the separation of the two companies, are included in discontinued operations for all periods presented.
Financial Position
TriMas reported total indebtedness of $459.4 million as of September 30, 2015, as compared to $638.6 million as of December 31, 2014, and $338.3 million as of September 30, 2014. The Company used the cash distribution from Horizon Global to reduce the outstanding borrowings in conjunction with the spin-off of the Cequent businesses. The increase in total indebtedness from the year ago period is related to the additional borrowings in October 2014 to fund the acquisition of Allfast Fastening Systems, net the reduction resulting from the Horizon Global distribution. TriMas ended third quarter 2015 with $129.7 million of cash and aggregate availability under its revolving credit and accounts receivable facilities.
Business Segment Results - From Continuing Operations(2)
Packaging
Net sales for the third quarter decreased 1.6% as compared to the year ago period, primarily as a result of unfavorable currency exchange, partially offset by increased specialty systems product sales due to the acquisition of Lion Holdings in the third quarter of 2014. Third quarter operating profit and the related margin percentage increased due to reductions in certain acquisition-related liabilities, lower material costs, a favorable shift in product mix and lower selling, general and administrative costs, partially offset by continued investment in global capabilities and unfavorable currency exchange. The Company continues to develop specialty dispensing and closure applications for growing end markets, including personal care, cosmetic, pharmaceutical, nutrition and food/beverage, and expand into growing markets.
Aerospace
Net sales for the third quarter increased 65.6% as compared to the year ago period, primarily due to the results of Allfast, which was acquired in October 2014, and higher demand from OE customers, partially offset by lower sales to large distribution customers. Third quarter operating profit and the related margin percentage increased by 400 basis points due to the higher sales levels and related operating leverage, continued productivity initiatives and a more favorable product mix, partially offset by increased selling, general and administrative costs related to the acquisition. The Company is focused on integrating and leveraging its aerospace businesses to better serve its customers, improving
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manufacturing efficiencies and throughput, and developing and qualifying additional highly-engineered products for aerospace applications.
Energy
Third quarter net sales increased 2.6% as compared to the year ago period, as increased North American sales, primarily related to higher levels of engineering and construction activity, more than offset reduced demand levels from upstream customers related to lower oil prices, lower sales in China and Brazil due to restructuring activities in those regions, and the impact of unfavorable currency exchange. Third quarter operating profit and the related margin percentage increased by 260 basis points as compared to the prior year period as a result of the higher sales levels, a more favorable product sales mix, improved manufacturing efficiencies and reduced selling, general and administrative costs. The Company has accelerated the restructuring actions in this business to drive manufacturing and operational improvements, optimize its global footprint and increase sales of its higher-margin, specialty products.
Engineered Components
Third quarter net sales decreased 32.6% as compared to the year ago period, primarily due to lower sales of engines and compressors resulting from the impact of lower oil prices, as well as decreased sales of industrial cylinders related to weaker demand in industrial end markets and lower levels of export sales due to the strong U.S. dollar. Third quarter operating profit and the related margin percentage also decreased, primarily due to the reduced sales level and lower fixed cost absorption related to engine and compression products, which were partially offset by cost reductions and productivity initiatives. The Company has responded to the dramatic drop in oil prices and the impact on engine and compressor demand by reducing its fixed cost structure, and continues to drive new product sales and expand its international sales efforts.
2015 Outlook
The Company is updating its full year 2015 outlook from continuing operations, slightly lowering sales outlook, while increasing earnings per share and Free Cash Flow guidance. Given external headwinds related to continued low levels of oil activity, lower macroeconomic growth and weakness in industrial end markets, the Company is estimating that 2015 sales will be relatively flat on a year-over-year basis. The Company is increasing its full-year 2015 diluted earnings per share outlook, from $1.15 to $1.25, to $1.25 to $1.30, excluding any future events that may be considered Special Items, as a result of the performance in the third quarter, as well as the modest impact of the Financial Improvement Plan expected in the fourth quarter of 2015. In addition, the Company is increasing 2015 Free Cash Flow outlook, (defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of the Financial Improvement Plan, less Capital Expenditures), to be between $50 million and $60 million, as compared to $30 million to $40 million previously.
Conference Call Information
TriMas Corporation will host its third quarter 2015 earnings conference call today, Thursday, October 29, 2015, at 10 a.m. ET. The call-in number is (888) 427-9376. Participants should request to be connected to the TriMas Corporation third quarter 2015 earnings conference call (Conference ID #284954). The conference call will also be simultaneously webcast via TriMas' website at www.trimascorp.com, under the "Investors" section, with an accompanying slide presentation. A replay of the conference call will be available on the TriMas website or by dialing (888) 203-1112 (Replay Code #284954) beginning October 29, 2015 at 3 p.m. ET through November 5, 2015 at 3 p.m. ET.
Notice Regarding Forward-Looking Statements
Any “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, contained herein, including, but not limited to, those relating to the Company’s business, financial condition or future results, involve risks and uncertainties, including, but not limited to, risks and uncertainties with respect to: the Company's leverage; liabilities imposed by the Company's debt instruments; market demand; competitive factors; supply constraints; material and energy costs; risks and uncertainties associated with intangible assets, including goodwill or other intangible asset impairment charges; technology factors; litigation; government and regulatory actions; the Company's accounting policies; future trends; general economic and currency conditions; various conditions specific to the Company's business and industry; the Company’s ability to integrate Allfast and attain the expected synergies, including that the acquisition is accretive; the Company’s ability to attain the Financial Improvement Plan targeted savings and free cash flow amounts; future prospects of the Company; and other risks that are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements made herein are based on information currently available, and the Company assumes no obligation to update any forward-looking statements.
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In this release, certain non-GAAP financial measures are used. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure may be found at the end of this release. Additional information is available at www.trimascorp.com under the “Investors” section.
About TriMas
Headquartered in Bloomfield Hills, Michigan, TriMas Corporation (NASDAQ: TRS) provides engineered and applied products for growing markets worldwide. TriMas is organized into four reportable segments: Packaging, Aerospace, Energy and Engineered Components. TriMas has approximately 4,000 employees at more than 50 facilities in 16 countries. For more information, visit www.trimascorp.com.
(1) | Appendix I details certain costs, expenses and other charges, collectively described as “Special Items,” that are included in the determination of net income from continuing operations attributable to TriMas Corporation under GAAP, but that management would consider important in evaluating the quality of the Company's operating results. |
(2) | Business Segment Results include Operating Profit that excludes the impact of Special Items. For a complete schedule of Special Items by segment, see “Company and Business Segment Financial Information - Continuing Operations.” |
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TriMas Corporation
Condensed Consolidated Balance Sheet
(Dollars in thousands)
September 30, 2015 | December 31, 2014 | |||||||
Assets | (unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 22,460 | $ | 24,420 | ||||
Receivables, net | 144,600 | 132,800 | ||||||
Inventories | 176,410 | 171,260 | ||||||
Deferred income taxes | 24,030 | 24,030 | ||||||
Prepaid expenses and other current assets | 12,550 | 8,690 | ||||||
Current assets, discontinued operations | — | 197,420 | ||||||
Total current assets | 380,050 | 558,620 | ||||||
Property and equipment, net | 174,320 | 177,470 | ||||||
Goodwill | 455,430 | 460,080 | ||||||
Other intangibles, net | 281,230 | 297,420 | ||||||
Other assets | 21,930 | 27,960 | ||||||
Non-current assets, discontinued operations | — | 140,200 | ||||||
Total assets | $ | 1,312,960 | $ | 1,661,750 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Current maturities, long-term debt | $ | 13,860 | $ | 23,400 | ||||
Accounts payable | 84,060 | 103,510 | ||||||
Accrued liabilities | 61,870 | 63,110 | ||||||
Current liabilities, discontinued operations | — | 119,900 | ||||||
Total current liabilities | 159,790 | 309,920 | ||||||
Long-term debt | 445,560 | 615,170 | ||||||
Deferred income taxes | 42,350 | 46,320 | ||||||
Other long-term liabilities | 57,400 | 64,450 | ||||||
Non-current liabilities, discontinued operations | — | 35,260 | ||||||
Total liabilities | 705,100 | 1,071,120 | ||||||
Total shareholders' equity | 607,860 | 590,630 | ||||||
Total liabilities and shareholders' equity | $ | 1,312,960 | $ | 1,661,750 | ||||
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TriMas Corporation
Consolidated Statement of Income
(Unaudited - dollars in thousands, except per share amounts)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net sales | $ | 222,190 | $ | 222,330 | $ | 671,220 | $ | 663,870 | ||||||||
Cost of sales | (159,720 | ) | (162,460 | ) | (484,110 | ) | (480,800 | ) | ||||||||
Gross profit | 62,470 | 59,870 | 187,110 | 183,070 | ||||||||||||
Selling, general and administrative expenses | (40,910 | ) | (39,350 | ) | (123,320 | ) | (113,070 | ) | ||||||||
Operating profit | 21,560 | 20,520 | 63,790 | 70,000 | ||||||||||||
Other expense, net: | ||||||||||||||||
Interest expense | (3,440 | ) | (2,080 | ) | (10,610 | ) | (6,310 | ) | ||||||||
Debt financing and extinguishment costs | — | — | (1,970 | ) | — | |||||||||||
Other expense, net | (720 | ) | (1,730 | ) | (2,330 | ) | (3,450 | ) | ||||||||
Other expense, net | (4,160 | ) | (3,810 | ) | (14,910 | ) | (9,760 | ) | ||||||||
Income from continuing operations before income tax expense | 17,400 | 16,710 | 48,880 | 60,240 | ||||||||||||
Income tax expense | (5,690 | ) | (5,620 | ) | (16,740 | ) | (21,020 | ) | ||||||||
Income from continuing operations | 11,710 | 11,090 | 32,140 | 39,220 | ||||||||||||
Income (loss) from discontinued operations, net of tax | — | 11,140 | (4,740 | ) | 28,590 | |||||||||||
Net income | 11,710 | 22,230 | 27,400 | 67,810 | ||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | 810 | ||||||||||||
Net income attributable to TriMas Corporation | $ | 11,710 | $ | 22,230 | $ | 27,400 | $ | 67,000 | ||||||||
Basic earnings per share attributable to TriMas Corporation: | ||||||||||||||||
Continuing operations | $ | 0.26 | $ | 0.24 | $ | 0.71 | $ | 0.85 | ||||||||
Discontinued operations | — | 0.25 | (0.10 | ) | 0.64 | |||||||||||
Net income per share | $ | 0.26 | $ | 0.49 | $ | 0.61 | $ | 1.49 | ||||||||
Weighted average common shares—basic | 45,157,412 | 44,919,340 | 45,102,067 | 44,863,008 | ||||||||||||
Diluted earnings per share attributable to TriMas Corporation: | ||||||||||||||||
Continuing operations | $ | 0.26 | $ | 0.24 | $ | 0.70 | $ | 0.85 | ||||||||
Discontinued operations | — | 0.25 | (0.10 | ) | 0.63 | |||||||||||
Net income per share | $ | 0.26 | $ | 0.49 | $ | 0.60 | $ | 1.48 | ||||||||
Weighted average common shares—diluted | 45,499,104 | 45,276,199 | 45,439,618 | 45,231,058 | ||||||||||||
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TriMas Corporation
Consolidated Statement of Cash Flow
(Unaudited - dollars in thousands)
Nine months ended September 30, | ||||||||
2015 | 2014 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | 27,400 | $ | 67,810 | ||||
Income (loss) from discontinued operations | (4,740 | ) | 28,590 | |||||
Income from continuing operations | 32,140 | 39,220 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: | ||||||||
Loss on dispositions of property and equipment | 590 | 430 | ||||||
Depreciation | 16,430 | 15,350 | ||||||
Amortization of intangible assets | 15,790 | 10,900 | ||||||
Amortization of debt issue costs | 1,360 | 1,430 | ||||||
Deferred income taxes | (4,220 | ) | (7,120 | ) | ||||
Non-cash compensation expense | 4,590 | 6,450 | ||||||
Excess tax benefits from stock based compensation | (300 | ) | (1,100 | ) | ||||
Debt financing and extinguishment costs | 1,970 | — | ||||||
Increase in receivables | (15,790 | ) | (24,610 | ) | ||||
Increase in inventories | (7,010 | ) | (1,970 | ) | ||||
(Increase) decrease in prepaid expenses and other assets | (1,020 | ) | 1,320 | |||||
Increase (decrease) in accounts payable and accrued liabilities | (15,540 | ) | 11,970 | |||||
Other, net | (250 | ) | 370 | |||||
Net cash provided by operating activities of continuing operations, net of acquisition impact | 28,740 | 52,640 | ||||||
Net cash provided by (used for) operating activities of discontinued operations | (14,030 | ) | 12,260 | |||||
Net cash provided by operating activities, net of acquisition impact | 14,710 | 64,900 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (20,360 | ) | (18,320 | ) | ||||
Acquisition of businesses, net of cash acquired | — | (27,510 | ) | |||||
Net proceeds from disposition of property and equipment | 1,680 | 50 | ||||||
Net cash used for investing activities of continuing operations | (18,680 | ) | (45,780 | ) | ||||
Net cash used for investing activities of discontinued operations | (2,510 | ) | (2,510 | ) | ||||
Net cash used for investing activities | (21,190 | ) | (48,290 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from borrowings on term loan facilities | 275,000 | — | ||||||
Repayments of borrowings on term loan facilities | (441,410 | ) | (6,660 | ) | ||||
Proceeds from borrowings on revolving credit and accounts receivable facilities | 995,620 | 732,480 | ||||||
Repayments of borrowings on revolving credit and accounts receivable facilities | (1,006,490 | ) | (687,520 | ) | ||||
Payments for deferred purchase price | (5,810 | ) | — | |||||
Debt financing fees | (1,850 | ) | — | |||||
Distributions to noncontrolling interests | — | (580 | ) | |||||
Payment for noncontrolling interests | — | (51,000 | ) | |||||
Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations | (2,620 | ) | (2,780 | ) | ||||
Proceeds from exercise of stock options | 430 | 480 | ||||||
Excess tax benefits from stock based compensation | 300 | 1,100 | ||||||
Cash transferred to the Cequent businesses | (17,050 | ) | — | |||||
Net cash used for financing activities of continuing operations | (203,880 | ) | (14,480 | ) | ||||
Net cash provided by financing activities of discontinued operations | 208,400 | 940 | ||||||
Net cash provided by (used for) financing activities | 4,520 | (13,540 | ) | |||||
Cash and Cash Equivalents: | ||||||||
Net increase (decrease) for the period | (1,960 | ) | 3,070 | |||||
At beginning of period | 24,420 | 27,000 | ||||||
At end of period | $ | 22,460 | $ | 30,070 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | 12,320 | $ | 7,960 | ||||
Cash paid for taxes | $ | 22,260 | $ | 25,610 | ||||
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TriMas Corporation
Company and Business Segment Financial Information
Continuing Operations
(Unaudited - dollars in thousands)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Packaging | ||||||||||||||||
Net sales | $ | 87,930 | $ | 89,320 | $ | 256,470 | $ | 257,000 | ||||||||
Operating profit | $ | 21,870 | $ | 20,770 | $ | 60,090 | $ | 59,670 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 280 | $ | 620 | $ | 710 | $ | 620 | ||||||||
Excluding Special Items, operating profit would have been | $ | 22,150 | $ | 21,390 | $ | 60,800 | $ | 60,290 | ||||||||
Aerospace | ||||||||||||||||
Net sales | $ | 45,380 | $ | 27,410 | 134,340 | 86,420 | ||||||||||
Operating profit | $ | 7,110 | $ | 3,870 | 22,410 | 14,390 | ||||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 1,120 | $ | — | 2,740 | — | ||||||||||
Excluding Special Items, operating profit would have been | $ | 8,230 | $ | 3,870 | 25,150 | 14,390 | ||||||||||
Energy | ||||||||||||||||
Net sales | $ | 51,600 | $ | 50,290 | $ | 152,910 | $ | 155,390 | ||||||||
Operating profit (loss) | $ | (3,560 | ) | $ | (1,100 | ) | $ | (10,390 | ) | $ | 870 | |||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 5,860 | $ | 2,080 | $ | 11,200 | $ | 4,430 | ||||||||
Excluding Special Items, operating profit would have been | $ | 2,300 | $ | 980 | $ | 810 | $ | 5,300 | ||||||||
Engineered Components | ||||||||||||||||
Net sales | $ | 37,280 | $ | 55,310 | $ | 127,500 | $ | 165,060 | ||||||||
Operating profit | $ | 4,380 | $ | 8,090 | $ | 16,570 | $ | 24,920 | ||||||||
Special Items to consider in evaluating operating profit: | ||||||||||||||||
Severance and business restructuring costs | $ | 90 | $ | — | 230 | — | ||||||||||
Excluding Special Items, operating profit would have been | $ | 4,470 | $ | 8,090 | 16,800 | 24,920 | ||||||||||
Corporate Expenses | ||||||||||||||||
Operating loss | $ | (8,240 | ) | $ | (11,110 | ) | $ | (24,890 | ) | $ | (29,850 | ) | ||||
Special Items to consider in evaluating operating loss: | ||||||||||||||||
Severance and business restructuring costs | $ | 940 | $ | — | 940 | — | ||||||||||
Excluding Special Items, operating loss would have been | $ | (7,300 | ) | $ | (11,110 | ) | (23,950 | ) | (29,850 | ) | ||||||
Total Continuing Operations | ||||||||||||||||
Net sales | $ | 222,190 | $ | 222,330 | $ | 671,220 | $ | 663,870 | ||||||||
Operating profit | $ | 21,560 | $ | 20,520 | $ | 63,790 | $ | 70,000 | ||||||||
Total Special Items to consider in evaluating operating profit | $ | 8,290 | $ | 2,700 | $ | 15,820 | $ | 5,050 | ||||||||
Excluding Special Items, operating profit would have been | $ | 29,850 | $ | 23,220 | $ | 79,610 | $ | 75,050 | ||||||||
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Appendix I
TriMas Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
(Unaudited - dollars in thousands, except per share amounts)
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Income from continuing operations, as reported | $ | 11,710 | $ | 11,090 | $ | 32,140 | $ | 39,220 | ||||||||
Less: Net income attributable to noncontrolling interests | — | — | — | 810 | ||||||||||||
Income from continuing operations attributable to TriMas Corporation | 11,710 | 11,090 | 32,140 | 38,410 | ||||||||||||
After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 6,120 | 2,530 | 12,050 | 4,800 | ||||||||||||
Debt extinguishment costs | — | — | 1,240 | — | ||||||||||||
Excluding Special Items, income from continuing operations attributable to TriMas Corporation would have been | $ | 17,830 | $ | 13,620 | $ | 45,430 | $ | 43,210 | ||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Diluted earnings per share from continuing operations attributable to TriMas Corporation, as reported | $ | 0.26 | $ | 0.24 | $ | 0.70 | $ | 0.85 | ||||||||
After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: | ||||||||||||||||
Severance and business restructuring costs | 0.13 | 0.05 | 0.27 | 0.10 | ||||||||||||
Debt extinguishment costs | — | — | 0.03 | — | ||||||||||||
Excluding Special Items, EPS from continuing operations would have been | $ | 0.39 | $ | 0.29 | $ | 1.00 | $ | 0.95 | ||||||||
Weighted-average shares outstanding | 45,499,104 | 45,276,199 | 45,439,618 | 45,231,058 | ||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net cash provided by operating activities of continuing operations | $ | 8,260 | $ | 13,410 | $ | 28,740 | $ | 52,640 | ||||||||
Add: Cash impact of Financial Improvement Plan | 730 | — | 730 | — | ||||||||||||
Cash Flows from operating activities excluding special items | 8,990 | 13,410 | 29,470 | 52,640 | ||||||||||||
Less: Capital expenditures of continuing operations | (7,470 | ) | (5,380 | ) | (20,360 | ) | (18,320 | ) | ||||||||
Free Cash Flow from continuing operations | $ | 1,520 | $ | 8,030 | $ | 9,110 | $ | 34,320 | ||||||||
9
Third Quarter 2015 Earnings Presentation October 29, 2015
Forward-Looking Statement Forward-Looking Statement Any “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, contained herein, including, but not limited to, those relating to the Company’s business, financial condition or future results, involve risks and uncertainties, including, but not limited to, risks and uncertainties with respect to: the Company's leverage; liabilities imposed by the Company's debt instruments; market demand; competitive factors; supply constraints; material and energy costs; risks and uncertainties associated with intangible assets, including goodwill or other intangible asset impairment charges; technology factors; litigation; government and regulatory actions; the Company's accounting policies; future trends; general economic and currency conditions; various conditions specific to the Company's business and industry; the Company’s ability to integrate Allfast and attain the expected synergies, including that the acquisition is accretive; the Company’s ability to attain the Financial Improvement Plan targeted savings and free cash flow amounts; future prospects of the Company; and other risks that are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014. These risks and uncertainties may cause actual results to differ materially from those indicated by the forward-looking statements. All forward-looking statements made herein are based on information currently available, and the Company assumes no obligation to update any forward-looking statements. Non-GAAP Financial Measures In this presentation, certain non-GAAP financial measures may be used. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure may be found at the end of this presentation or in the earnings releases available on the Company’s website. Additional information is available at www.trimascorp.com under the “Investors” section. 2
Agenda • Opening Remarks • Financial Highlights • Segment Highlights • Outlook and Summary • Questions and Answers • Appendix 3
Opening Remarks • Third quarter sales of approximately $222.2 million – relatively flat year- over-year due to external headwinds • Attained $0.39(1) EPS for the quarter, an increase of 34.5% as compared to third quarter 2014 • Operating profit margin(1) improvement of approximately 300 basis points year-over-year • Focused on mitigating external headwinds • Launched Financial Improvement Plan to improve profitability, cash flow conversion and operational efficiency 4 Continue to implement actions to mitigate external headwinds and drive improved performance. (1) Defined as operating profit margin and diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” “Special Items” are provided in the Appendix.
External Headwinds and Tailwinds Headwinds • Oil and commodity price declines ‒ Drilling and well completion activity ‒ Capex reductions ‒ Resin and specialty steel prices • Inventory reductions at distributors ‒ Large aerospace distributors ‒ Overall supply chain reductions • Strength of U.S. dollar – Translation and transaction impacts – Exports in Engineered Components – Imports more competitive • Overall slow macroeconomic growth ‒ Certain industrial activity slowing 5 Tailwinds • Commercial aircraft build rates and backlog • Asia still growing, albeit at lower rates – uncertainty around China Pressure on the top-line and margin – ongoing actions to mitigate.
Key Business Initiatives 6 Profitable Growth Margin Packaging • Reorganize globally to end market focus • Develop new products • Optimize global footprint Aerospace • Leverage one aerospace platform • Develop new products and expand product lines • Improve operational efficiency at all locations Energy • Increase sales of higher margin products • Improve operational efficiency at all locations • Optimize global footprint Engineered Components Cylinders • Increase capacity to support continued growth • Expand product offering and end markets served • Maintain margins through ongoing productivity Engines/Related Products • Build upon broad range of quality products • “Right-size” business to reflect current market demand All/Corporate • Further implement TriMas Operating System and Lean initiatives • Reduce corporate expense Initiatives remain consistent to achieve profitable growth and increased margins – focused on execution.
Financial Highlights
Third Quarter Summary • Q3 sales were relatively flat as compared to Q3 2014 – acquisition and organic sales growth offset by impact of lower oil-related activity and unfavorable currency exchange • Q3 operating profit dollars and margin percentage increased – margin increased 300 basis points as a result of improvements in Packaging, Aerospace and Energy, and a reduction in corporate expenses • Income and diluted EPS both increased more than 30% as compared to Q3 2014 • FCF lower than last year as a result of timing of payments, but expected to be between $50 million to $60 million for full year 2015 • Total debt increased as compared to Q3 2014 as a result of the Q4 2014 acquisition of Allfast, but lower than year end due to debt pay down resulting from Horizon Global dividend related to spin-off 8 (1) Defined as income from continuing operations and diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” “Special Items” for each period are provided in the Appendix. (2) Free Cash Flow is defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of the Financial Improvement Plan, less Capital Expenditures. (Unaudited, excluding Special Items, dollars in millions, except per share amounts) Increased margin and earnings, despite top-line pressures from external headwinds. ( fro m co ntinuing o perat io ns) Q3 2015 Q3 2014 Variance Revenue $222.2 $222.3 -0.1% Operating profit $29.9 $23.2 28.6% Operating profit margin 13.4% 10.4% 300 bps Income (1) $17.8 $13.6 30.9% Diluted EPS(1) $0.39 $0.29 34.5% Free Cash Flow (2) $1.5 $8.0 -81.1% Total debt $459.4 $338.3 35.8%
9 • Continued low oil-related activity resulted in $0.06 decline in Q3 2015 versus Q3 2014 • 300 basis point operating profit margin improvement – organic margin expansion and lower corporate expenses • Allfast acquisition continues to contribute significantly, despite top-line pressure from key distribution customers Impact of low oil-related activity offset by higher organic and acquisition earnings, and lower corporate expenses. (1) Excludes the impact of “Special Items.” For a detailed reconciliation, excluding “Special Items,” please see the Appendix. (1) (1) EPS(1) Bridge from Q3 2014 to Q3 2015
Financial Improvement Plan • Announced in September 2015 – implementation in progress • $15 million of annual savings – $5 million related to acceleration of Energy business restructuring – $10 million of fixed overhead and SG&A reductions across rest of Company – One-time charges of approximately $6 million to $7 million • Limited impact in Q3 and Q4 with majority of savings expected to be realized in 2016 • Mitigate top-line and conversion pressures • Improved free cash flow conversion of nearly 100% of net income – Aggressive management of capital expenditures and working capital 10 Focused on improving operational efficiency, profitability and cash flow conversion, while offsetting continued external headwinds in 2016.
Segment Highlights
Packaging 12 • Sales decreased due to $2.5 million of unfavorable currency exchange • Margin percentage increased due to reductions in certain acquisition-related liabilities, lower material costs, a favorable shift in product mix and lower SG&A Strategies • Deployed new brand and completed global reorganization to an end market focus to better serve customers • Continuing ramp-up of manufacturing capabilities in Asia • Developing world-class product development team and customer innovation center in India • Implementing continuous pipeline of productivity initiatives to fund growth while maintaining margins Quarterly Commentary (Unaudited, dollars in millions) (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix. Q3 YTD 2015 Segment Contribution 38% By Revenue 59% By Operating Profit(1) Positioning business for customer innovation and future growth, while maintaining targeted margin levels. Financial Snapshot Q3 2015 Q3 2014 Variance Sales $87.9 $89.3 -1.6% Operating profit (1) $22.2 $21.4 3.6% Operating profit margin (1) 25.2% 23.9% 130 bps
Aerospace 13 • Sales increased due to Allfast acquisition completed in Q4 2014 • Higher demand from large OE customers, but lower demand from large distributors reducing inventory levels • Margin improved 400 basis points due to higher sales and related operating leverage, a more favorable product sales mix and continued productivity initiatives Strategies • Integrating and leveraging separate aerospace platforms to better serve customers and enhance margins • Launched Engineering Research and Technology group to support customers, innovation and growth • Developing and qualifying additional highly-engineered products for aerospace applications • Improving manufacturing efficiency and productivity across the businesses (Unaudited, dollars in millions) Q3 YTD 2015 Segment Contribution 20% By Revenue 24% By Operating Profit(1) Quarterly Commentary Positioning TriMas Aerospace as a supplier of choice. (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix. Financial Snapshot Q3 2015 Q3 2014 Variance Sales $45.4 $27.4 65.6% Operating profit (1) $8.2 $3.9 112.7% Operating profit margin (1) 18.1% 14.1% 400 bps
Energy 14 • Sales increased in North America due to higher engineering and construction activity • Lower oil price impact on upstream customers, lower international sales due to restructuring and unfavorable currency exchange continued to be headwinds • Margins improved 260 basis points as a result of higher sales, a more favorable product sales mix and improved operational efficiencies Strategies • Implement further cost structure reductions and branch consolidation • Consolidating Houston operations and relocating a portion of Houston manufacturing to Mexico • Improve operational efficiency at all locations • Increase sales of higher-margin, specialty products (Unaudited, dollars in millions) Q3 YTD 2015 Segment Contribution 23% By Revenue 1% By Operating Profit(1) Quarterly Commentary Accelerated broader restructuring of footprint and additional fixed and variable cost-out actions to drive margin improvement. (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix. Financial Snapshot Q3 2015 Q3 2014 Variance Sales $51.6 $50.3 2.6% Operating profit (1) $2.3 $1.0 134.7% Operating profit margin (1) 4.5% 1.9% 260 bps
Engineered Components 15 • Engine-related sales decreased more than 60% as a result of lower oil prices – remained breakeven by aligning cost structure • Cylinder sales declined due to softness in industrial end markets and lower export sales due to stronger U.S. dollar • Margins declined primarily due to lower sales and fixed cost absorption Strategies • Implemented additional engine-related cost reduction actions to mitigate top-line pressures and remain profitable • Adding incremental cylinder capabilities and capacity • Expanding engine product lines to diversify and reduce end-market cyclicality (Unaudited, dollars in millions) Q3 YTD 2015 Segment Contribution [VA LUE ] By Revenue 16% By Operating Profit(1) Quarterly Commentary Focused on mitigating top-line headwinds by reducing costs to better reflect end market demand. (1) Operating profit excludes “Special Items” and corporate expense (in calculation of segment contribution). “Special Items” for each period are provided in the Appendix. Financial Snapshot Q3 2015 Q3 2014 Variance Sales $37.3 $55.3 -32.6% Operating profit (1) $4.5 $8.1 -44.7% Operating profit margin (1) 12.0% 14.6% -260 bps
Segment Performance Summary 16 (Unaudited, excluding Special Items, dollars in millions) Sales Operating Profit Margin(1) (1) Excludes the impact of “Special Items.” For a detailed reconciliation, excluding “Special Items,” please see the Appendix. Q3 2015 Q2 2015 FY 2014 Q3 2014 Packaging $87.9 $89.6 $337.7 $89.3 Aerospace $45.4 $43.2 $121.5 $27.4 Energy $51.6 $50.2 $206.7 $50.3 Engineered Components $37.3 $42.0 $221.4 $55.3 Q3 2015 Q2 2015 FY 2014 Q3 2014 Packaging 25.2% 23.4% 23.9% 23.9% Aerospace 18.1% 18.6% 15.2% 14.1% Energy 4.5% -6.5% 3.1% 1.9% Engineered Components 12.0% 15.0% 15.4% 14.6% Improved margins in three out of four of our segments year-over-year, despite top-line pressures.
Outlook and Summary
Updated FY 2015 Segment Assumptions 18 Segment Revenue Margin Q4 Commentary Packaging • Low single-digit growth after considering 2% to 3% currency headwind • Maintain 22% to 24% operating profit margins • Expecting lower sequential sales in Q4 due to customer product launch delays and industrial end market weakness • Continued growth investments in Asia and North America Aerospace • Growth of 45% to 50% due to Allfast acquisition • Major distributors reducing inventory levels • Full year operating profit margins of approximately 18% to 19% • Operational efficiencies • Lower sales due to large distributors impacting top-line and mix • Q4 typically lowest revenue quarter of year due to holiday slowdown in customer orders Energy • Down low to mid single-digits due to impact of lower oil prices on upstream volume, reduced refinery capex spending and currency headwind • Low single-digit operating profit margin due to lower volume, port strike cost impact and settlement of legal claim during year • Expect 5% to 10% top-line reduction sequentially in Q4 as headwinds continue and exit lower margin business • Accelerated restructuring of footprint, additional cost-out actions and operational efficiencies Engineered Components • Lower oil prices reducing Arrow revenue ~ 50% to 60% • Lower exports due to stronger U.S. dollar • Selling prices impacted by lower steel prices • Operating profit margin in 10% to 12% range – trending toward higher end of range • Margin headwind due to lower oil prices impact • Industrial gas market slowdown expected to impact cylinder sales by more than 10% • Mitigating engine-related top-line pressure with cost reductions to breakeven External headwinds in fourth quarter expected to further pressure revenue growth and product mix – focus on Financial Improvement Plan and other margin improvement initiatives.
Updated FY 2015 Outlook Full Year Outlook as of 8/4/15 Updated Full Year Outlook as of 10/29/15 Comments Sales Growth • Increased top-line pressure on all businesses due to external headwinds • Continued macro-economic weakness in industrial markets • Acquisition growth more than offset by impact of continued low levels of oil-related activity and unfavorable currency Earnings Per Share, diluted(1) $1.15 to $1.25 $1.25 to $1.30 • Solid performance in Q3 • Implementing Financial Improvement Plan to help mitigate impact of weak end markets • Modest impact of Financial Improvement Plan in 2015 – full impact in 2016 • Full year tax rate at ~32% Free Cash Flow(2) $30 to $35 million $50 to $60 million • Managing working capital and capital expenditures consistent with environment (1) Defined as diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” (2) Free Cash Flow is defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of the Financial Improvement Plan, less Capital Expenditures. 19 Organic 3% to 4% Acquisitions 6% to 7% Oil Price Decline ~ (7.5%) Currency ~ (1%) 0% to 2% Increasing 2015 EPS and Free Cash Flow outlook. From Continuing Operations 2% to 3% 6% to 7% ~ (8%) ~ (1%) -1% to 1%
2016 Preliminary Thoughts 20 Packaging Aerospace Energy Engineered Components Corporate Expense • Consumer-based specialty dispensing products ~75% of sales • Industrial closures impacted by end market weakness • ~25% to 30% of sales outside of North America – China slowing; India up mid- single digits; Europe flat • Organic growth from customer and product wins • Focus on innovation and globalization continues • Revenue split of ~45% for OE versus ~55% for distribution • Commercial backlogs remain high – solid build rates but new platforms slower • Distributors expect to continue to reduce inventory levels • Military sales down due to defense cuts • New qualifications at Airbus and additional collar certifications • Leverage separate aerospace platforms to drive growth and enhance margins • Majority of business is MRO-related • Lower oil prices and related activity continued to impact upstream volume and reduce refinery capex spending – no recovery assumed • Selectively exit certain lower margin business • Focus on fixed and variable cost reductions • Restructuring business for improved operational efficiency and margin • Cylinder products comprise majority of segment • No recovery assumed related to lower oil prices and activity • Low backlog entering the year • Cylinder sales impacted by overall industrial weakness • Exports continue to be challenged due to strong U.S. dollar • Continue to “right-size” business to reflect current market demand • Cash costs decreased 3% to 3.5% of sales • Tax rate relatively flat with 2015 • TSA with Horizon Global winds down • Overall low to mid- single digit sales growth expected • Operating at targeted margin levels • Overall low to mid- single digit sales growth expected • Continued margin expansion • Overall sales down low to mid-single digits • Continued margin expansion • Overall sales down mid to high-single digits • Engine business at breakeven at lower run rate • Cylinder business holds targeted margin range via productivity Earnings expansion in the face of top-line headwinds – focus on what we can control.
Financial Targets Grow Packaging and Aerospace sales 2x other businesses; improve Aerospace and Energy margins to historical levels. Segment Target Revenue Growth Target 2018 Operating Profit Margin Packaging • Mid single-digit organic growth, complemented by acquisitions 22% – 24% Aerospace • Mid-to-high single-digit organic growth, complemented by acquisitions 24% – 26% Energy • GDP+ organic growth 10% – 12% Engineered Components • GDP+ organic growth 14% – 16% Corporate • N/A < 3% of Sales Key Assumptions: • No economic recession • Real GDP 1.5% - 2.5% • Currency rates held constant at Q1 2015 rates • Oil price and rig counts rise to 2014 levels by 2018 • Corporate excludes non- cash long-term equity incentive expense 21
Summary • Ongoing margin improvement – all tactics implemented – Grow higher-margin Packaging and Aerospace – Execute Financial Improvement Plan – each business and corporate – Restructure Energy – fixed and variable cost-out; added program managers – Continuous productivity pipeline – Selectively exit lower margin products, customers and locations – Incent desired behaviors – incentive system metric • Mitigate external headwinds • Capitalize on profitable growth opportunities • Capital allocation – focus on investments with highest returns • Consider opportunistic and value-accretive acquisitions – focus M&A on Packaging and Aerospace 22 Firm understanding of the challenges and external factors – focused on execution for remainder of 2015 and beyond.
Questions and Answers
Appendix
Third Quarter YTD Summary 25 (1) Defined as income from continuing operations and diluted earnings per share from continuing operations attributable to TriMas Corporation, excluding “Special Items.” “Special Items” for each period are provided in the Appendix. (2) Free Cash Flow is defined as Net Cash Provided by Operating Activities of Continuing Operations, excluding the cash impact of the Financial Improvement Plan, less Capital Expenditures. (Unaudited, excluding Special Items, dollars in millions, except per share amounts) Organic and acquisition growth offset by impact of lower oil prices and unfavorable currency. ( fro m co ntinuing o perat io ns) Q3 YTD 2015 Q3 YTD 2014 Variance Revenue $671.2 $663.9 1.1% Operating profit $79.6 $75.1 6.1% Operating profit margin 11.9% 11.3% 60 bps Income (1) $45.4 $43.2 5.1% Diluted EPS(1) $1.00 $0.95 5.3% Free Cash Flow (2) $9.1 $34.3 -73.5% Total debt $459.4 $338.3 35.8% • YTD sales were relatively flat as compared to YTD 2014 – acquisition and organic sales growth offset by impact of lower oil-related activity and unfavorable currency exchange • Operating profit dollars and margin percentage increased – margin increased 60 basis points as a result of improvements in Packaging and Aerospace, and a reduction in corporate expense • Income and diluted EPS both increased as compared to Q3 2014 • FCF lower than last year as a result of timing of payments, but expected to be between $50 million to $60 million for full year 2015 • Total debt increased as compared to Q3 2014 as a result of the Q4 2014 acquisition of Allfast, but lower than year end due to debt pay down resulting from Horizon Global dividend related to spin-off
Condensed Consolidated Balance Sheet 26 September 30, December 31, 2015 2014 (unaudited) Assets Current assets: Cash and cash equivalents............................................................ 22,460$ 24,420$ Receivables, net........................................................................... 144,600 132,800 Inventories.................................................................................... 176,410 171,260 Deferred income taxes................................................................... 24,030 24,030 Prepaid expenses and other current assets..................................... 12,550 8,690 Current assets, discontinued operations.......................................... - 197,420 Total current assets................................................................... 380,050 558,620 Property and equipment, net.............................................................. 174,320 177,470 Goodwill........................................................................................... 455,430 460,080 Other intangibles, net........................................................................ 281,230 297,420 Other assets.................................................................................... 21,930 27,960 Non-current assets, discontinued operations....................................... - 140,200 Total assets.............................................................................. 1,312,960$ 1,661,750$ Liabilities and Shareholders' Equity Current liabilities: Current maturities, long-term debt................................................... 13,860$ 23,400$ Accounts payable......................................................................... 84,060 103,510 Accrued liabilities.......................................................................... 61,870 63,110 Current liabilities, discontinued operations....................................... - 119,900 Total current liabilities................................................................ 159,790 309,920 Long-term debt................................................................................. 445,560 615,170 Deferr d i come taxes...................................................................... 42,350 46,320 Other long-term liabilities................................................................... 57,400 64,450 Non-current liabilities, discontinued operations.................................... - 35,260 Total liabilities........................................................................... 705,100 1,071,120 Total shareholders' equity........................................................... 607,860 590,630 Total liabilities and shareholders' equity....................................... 1,312,960$ 1,661,750$ (Dollars in thousands)
Consolidated Statement of Income 27 Three months ended Nine months ended 2015 2014 2015 2014 Net sales................................................................................................. 222,190$ 222,330$ 671,220$ 663,870$ Cost of sales............................................................................................ (159,720) (162,460) (484,110) (480,800) Gross profit........................................................................................... 62,470 59,870 187,110 183,070 Selling, general and administrative expenses............................................... (40,910) (39,350) (123,320) (113,070) Operating profit..................................................................................... 21,560 20,520 63,790 70,000 Other expense, net: Interest expense................................................................................... (3,440) (2,080) (10,610) (6,310) Debt financing and extinguishment costs................................................. - - (1,970) - Other expense, net................................................................................ (720) (1,730) (2,330) (3,450) Other expense, net............................................................................ (4,160) (3,810) (14,910) (9,760) Income from continuing operations before income tax expense...................... 17,400 16,710 48,880 60,240 Income tax expense.................................................................................. (5,690) (5,620) (16,740) (21,020) Income from continuing operations.............................................................. 11,710 11,090 32,140 39,220 Income (loss) from discontinued operations, net of tax.................................. - 11,140 (4,740) 28,590 Net income............................................................................................... 11,710 22,230 27,400 67,810 Less: Net income attributable to noncontrolling interests.............................. - - - 810 Net income attributable to TriMas Corporation.............................................. 11,710$ 22,230$ 27,400$ 67,000$ Earnings per share attributable to TriMas Corporation - basic: Continuing operations............................................................................ 0.26$ 0.24$ 0.71$ 0.85$ Discontinued operations......................................................................... - 0.25 (0.10) 0.64 Net income per share............................................................................ 0.26$ 0.49$ 0.61$ 1.49$ Weighted average common shares - basic 45,157,412 44,919,340 45,102,067 44,863,008 Earnings per share attributable to TriMas Corporation - diluted: Continuing operations............................................................................ 0.26$ 0.24$ 0.70$ 0.85$ Discontinued operations......................................................................... - 0.25 (0.10) 0.63 Net income per share............................................................................ 0.26$ 0.49$ 0.60$ 1.48$ Weighted average common shares - diluted 45,499,104 45,276,199 45,439,618 45,231,058 September 30, September 30, (Unaudited, dollars in thousands, except for per share amounts)
Consolidated Statement of Cash Flow (Unaudited, dollars in thousands) 28 2015 2014 Cash Flows from Operating Activities: Net income.............................................................................................................................. 27,400$ 67,810$ Income (loss) from discontinued operations................................................................................ (4,740) 28,590 Income from continuing operations............................................................................................. 32,140 39,220 Adjustments to reconcile net income to net cash provided by operating activities, net of acquisition impact: Loss on dispositions of property and equipment...................................................................... 590 430 Depreciation......................................................................................................................... 16,430 15,350 Amortization of intangible assets........................................................................................... 15,790 10,900 Amortization of debt issue costs............................................................................................ 1,360 1,430 Deferred income taxes.......................................................................................................... (4,220) (7,120) Non-cash compensation expense.......................................................................................... 4,590 6,450 Excess tax benefits from stock based compensation............................................................... (300) (1,100) Debt financing and extinguishment costs................................................................................ 1,970 - Increase in receivables.......................................................................................................... (15,790) (24,610) Increase in inventories........................................................................................................... (7,010) (1,970) (Increase) decrease in prepaid expenses and other assets....................................................... (1,020) 1,320 Increase (decrease) in accounts payable and accrued liabilities................................................ (15,540) 11,970 Other, net............................................................................................................................ (250) 370 Net cash provided by operating activities of continuing operations, net of acquisition impact.... 28,740 52,640 Net cash provided by (used for) operating activities of discontinued operations........................ (14,030) 12,260 Net cash provided by operating activities, net of acquisition impact.................................... 14,710 64,900 Cash Flows from Investing Activities: Capital expenditures............................................................................................................. (20,360) (18,320) Acquisition of businesses, net of cash acquired...................................................................... - (27,510) Net proceeds from disposition of assets................................................................................. 1,680 50 Net cash used for investing activities of continuing operations............................................... (18,680) (45,780) Net cash used for investing activities of discontinued operations............................................ (2,510) (2,510) Net cash used for investing activities............................................................................... (21,190) (48,290) Cash Flows from Financing Activities: Proceeds from borrowings on term loan facilities..................................................................... 275,000 - Repayments of borrowings on term loan facilities..................................................................... (441,410) (6,660) Proceeds from borrowings on revolving credit and accounts receivable facilities.......................... 995,620 732,480 Repayments of borrowings on revolving credit and accounts receivable facilities......................... (1,006,490) (687,520) Payments for deferred purchase price..................................................................................... (5,810) - Debt financing fees............................................................................................................... (1,850) - Distributions to noncontrolling interests.................................................................................. - (580) Payment for noncontrolling interests....................................................................................... - (51,000) Shares surrendered upon vesting of options and restricted stock awards to cover tax obligations…...…………………………………………………………………………………….……… (2,620) (2,780) Proceeds from exercise of stock options................................................................................ 430 480 Excess tax benefits from stock based compensation............................................................... 300 1,100 Cash transferred to the Cequent businesses........................................................................... (17,050) - Net cash used for financing activities of continuing operations............................................... (203,880) (14,480) Net cash provided by financing activities of discontinued operations....................................... 208,400 940 Net cash provided by (used for) financing activities........................................................... 4,520 (13,540) Cash and Cash Equivalents: Net increase (decrease) for the period.................................................................................... (1,960) 3,070 At beginning of period........................................................................................................... 24,420 27,000 At end of period................................................................................................................ 22,460$ 30,070$ Supplemental disclosure of cash flow information: Cash paid for interest........................................................................................................ 12,320$ 7,960$ Cash paid for taxes........................................................................................................... 22,260$ 25,610$ September 30, Nine months ended
Company and Business Segment Financial Information 29 Three months ended 2015 2014 2015 2014 Packaging Net sales................................................................................................................................................ 87,930$ 89,320$ 256,470$ 257,000$ Operating profit........................................................................................................................................ 21,870$ 20,770$ 60,090$ 59,670$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 280$ 620$ 710$ 620$ Excluding Special Items, operating profit would have been................................................................... 22,150$ 21,390$ 60,800$ 60,290$ Aerospace Net sales................................................................................................................................................ 45,380$ 27,410$ 134,340$ 86,420$ Operating profit........................................................................................................................................ 7,110$ 3,870$ 22,410$ 14,390$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 1,120$ -$ 2,740$ -$ Excluding Special Items, operating profit would have been................................................................... 8,230$ 3,870$ 25,150$ 14,390$ Energy Net sales................................................................................................................................................ 51,600$ 50,290$ 152,910$ 155,390$ Operating profit (loss)............................................................................................................................... (3,560)$ (1,100)$ (10,390)$ 870$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 5,860$ 2,080$ 11,200$ 4,430$ Excluding Special Items, operating profit would have been................................................................... 2,300$ 980$ 810$ 5,300$ Engineered Components Net sales................................................................................................................................................ 37,280$ 55,310$ 127,500$ 165,060$ Operating profit........................................................................................................................................ 4,380$ 8,090$ 16,570$ 24,920$ Special Items to consider in evaluating operating profit: Severance and business restructuring costs........................................................................................... 90$ -$ 230$ -$ Excluding Special Items, operating profit would have been................................................................... 4,470$ 8,090$ 16,800$ 24,920$ Corporate expenses Operating loss......................................................................................................................................... (8,240)$ (11,110)$ (24,890)$ (29,850)$ Special Items to consider in evaluating operating loss: Severance and business restructuring costs........................................................................................... 940$ -$ 940$ -$ Excluding Special Items, operating loss would have been.................................................................... (7,300)$ (11,110)$ (23,950)$ (29,850)$ Total Continuing Operations Net sales................................................................................................................................................ 222,190$ 222,330$ 671,220$ 663,870$ Operating profit........................................................................................................................................ 21,560$ 20,520$ 63,790$ 70,000$ Total Special Items to consider in evaluating operating profit........................................................................ 8,290$ 2,700$ 15,820$ 5,050$ Excluding Special Items, operating profit would have been................................................................... 29,850$ 23,220$ 79,610$ 75,050$ September 30, September 30, Nine months ended (Unaudited, dollars in thousands, from continuing operations)
Additional Information Regarding Special Items Impacting Reported GAAP Financial Measures 30 Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Income from continuing operations, as reported............................................................................................................................... 11,710$ 11,090$ 32,140$ 39,220$ Less: Net income attributable to noncontrolling interests.......................................................................................................................... - - - 810 Income from continuing operations attributable to TriMas Corporation........................................................................................................ 11,710 11,090 32,140 38,410 After-tax impact of Special Items to consider in evaluating quality of income from continuing operations: Severance and business restructuring costs....................................................................................................................................... 6,120 2,530 12,050 4,800 Debt extinguishment costs................................................................................................................................................................ - - 1,240 - Excluding Special Items, income from continuing operations attributable to TriMas Corporation would have been..................... 17,830$ 13,620$ 45,430$ 43,210$ Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Diluted earnings per share from continuing operations attributable to TriMas Corporation, as reported.......................................... 0.26$ 0.24$ 0.70$ 0.85$ After-tax impact of Special Items to consider in evaluating quality of EPS from continuing operations: Severance and business restructuring costs....................................................................................................................................... 0.13 0.05 0.27$ 0.10 Debt extinguishment costs................................................................................................................................................................ - - 0.03$ - Excluding Special Items, EPS from continuing operations would have been................................................................................ 0.39$ 0.29$ 1.00$ 0.95$ Weighted-average shares outstanding .......................................................................................................................................... 45,499,104 45,276,199 45,439,618 45,231,058 2015 2014 2015 2014 Operating profit from continuing operations (excluding Special Items)……………………….……….................................................... 29,850$ 23,220$ 79,610$ 75,050$ Corporate expenses (excluding Special Items)…………………………………………................................................................................ 7,300 11,110 23,950 29,850 Segment operating profit (excluding Special Items)…………………................................................................................................... 37,150$ 34,330$ 103,560$ 104,900$ Segment operating profit margin (excluding Special Items)…...……................................................................................................ 16.7% 15.4% 15.4% 15.8% 2015 2014 2015 2014 Net cash provided by Operating Activities of continuing operations............................................................................................................ 8,260$ 13,410$ 28,740$ 52,640$ Add: Cash impact of Financial Improvement Plan.................................................................................................................................... 730 - 730 - Cash Flows from operating activities excluding special items................................................................................................................... 8,990 13,410 29,470 52,640 Less: Capital expenditures of continuing operations................................................................................................................................. (7,470) (5,380) (20,360) (18,320) Free Cash Flow from continuing operations............................................................................................................................................. 1,520$ 8,030$ 9,110$ 34,320$ Three months ended September 30, Nine months ended September 30, September 30, September 30, Three months ended Nine months ended (Unaudited, dollars in thousands, except for per share amounts)
Current Debt Structure 31 (Unaudited, dollars in thousands) As of September 30, 2015, TriMas had $129.7 million of cash and available liquidity under its revolving credit and accounts receivable facilities. September 30, December 31, 2015 2014 Cash and Cash Equivalents……………………………..………………… 22,460$ 24,420$ Credit Agreement……………………………………….. 390,120 559,530 Receivables facility and other……………………………….. 69,300 79,040 Total Debt………………………...………………………...………………………… 459,420 638,570 Key Ratios: Bank LTM EBITDA……………………………………………………………………………….……………………………………… 164,040$ 243,610$ Interest Coverage Ratio………………………………………………………………… 13.42 x 13.02 x Leverage Ratio…………………………………………………………………... 2.85 x 2.71 x Bank Covenants: Minimum Interest Coverage Ratio………………………………………………………………… 3.00 x 3.00 x Maximum Leverage Ratio………………………………………………………………………………… 3.50 x 3.50 x
LTM Bank EBITDA as Defined in Credit Agreement 32 (Unaudited, dollars in thousands) (1) As defined in the Credit Agreement dated June 30, 2015. 28,870$ Interest expense....................................................................................................................... 13,890 Income tax expense.................................................................................................................. 17,510 Depreciation and amortization.................................................................................................... 43,400 Non-cash compensation expense............................................................................................... 5,250 Other non-cash expenses or losses........................................................................................... 15,190 Non-recurring expenses or costs relating to cost saving projects .................................................. 14,580 Acquisition integration costs...................................................................................................... 8,020 Debt financing and extinguishment costs.................................................................................... 5,330 Permitted dispositions............................................................................................................... 9,410 Permitted acquisitions............................................................................................................... 830 Negative EBITDA from discontinued operations............................................................................ 1,760 164,040$ Net income for the twelve months ended September 30, 2015 ......................................................... Bank EBITDA - LTM Ended September 30, 2015 (1)…………………………………………………………………